Domestic Regulation and the WTO: The Case of Water Services in Developing Countries

摘要

Proposals for the liberalisation of the water services sector in developing countries under the GATS framework have provoked considerable public debate and opposition. The purpose of this article has been to assess the case for water services liberalisation in developing countries, in the context of the current negotiations on the WTO GATS agreement. Water is a basic necessity and the provision of water services in all countries is affected by public policy objectives. Where the private sector is involved in the delivery of water services, a regulatory institutional structure is needed to ensure compliance with economic, social and environmental objectives. This has a number of policy implications for the adoption of trade liberalisation in water services in developing countries. First, regulatory capacity needs to be strengthened and effective regulatory institutions established. Market liberalisation in the context of non-competitive markets and institutional and regulatory deficiencies is unlikely to yield the standard benefits of trade liberalisation and may worsen inequalities in the distribution of services and in the access of the poor to the services. This suggests that developing countries with limited regulatory resources should adopt a cautious approach to liberalisation of water services, by sequencing the liberalisation programme to match the development of the regulatory institutional capacity.